2019 Indian Cashew Kernel Market: Review and Outlook Somnath - - PowerPoint PPT Presentation

2019 Indian Cashew Kernel Market: Review and Outlook

Somnath Chatterjee Head- Procurement & Logistics

ITC Limited- Foods Division

Presentation Flow

• FMCG Industry
• Consumer Trends
• Usage of Cashew
• India
• Consumption & Production trends
• Challenges
• Internal
• External
• 2019 Prospects

38.01 43.15 49.21 53.96 60.43

22% 27% 19% 15% 19%

0.2 0.25 0.3 40.00 50.00 60.00 70.00

FMCG Value Crores & Growth

Val Billion $ GOLY

FORECASTED

Softening FMCG growth. . largely stable over the last few years . .

11.14 13.58 17.24 20.44 23.53 28.03 31.32 33.56 38.01

15% 12% 7% 13% 14% 14% 12.4% 12%

0.05 0.1 0.15

• 10.00

20.00 30.00 40.00

MAT DEC'07 MAT DEC'08 MAT DEC'09 MAT DEC'10 MAT DEC'11 MAT DEC'12 MAT DEC'13 MAT DEC'14 MAT DEC'15 MAT DEC'16 MAT DEC'17 MAT SEPT'18 MAT Dec'19

Branded Food Industry nearly 30 Billion $ & Growing the fastest

38 6 FOOD NON-FOOD OTC

Value%

20 9 36 Top 8 Metro Next 27 Metro Other Metro Town Class 1 Rest of Urban

Value%

55

FMCG : 53.96 Billion $ Food : 29.80 Billion $

Market Growth % CAGR over MAT Jun 2016 FMCG 12.40% 13.40% Food 13.50% 14.40% Non Food 11.00% 12.20% OTC 11.70% 12.30% 9 3 16 16 Rest of Urban Rural Market Growth % CAGR over MAT Jun 2016 Store

• Contr. %

All India 12.4% 13.4% 100% Top 8 Metro 10.6% 12.5% 7% Next 27 Metro 11.0% 11.3% 5% Other Metro 13.0% 12.8% 2% Town Class 1 13.5% 13.0% 11% Rural 14.5% 14.9% 61% Store Base : 10.1 Million Stores

Consumer trends are evolving…

BUSY LIVES - CONVENIENCE SEEKING ON THE RISE

Consumers seeking out products and services that either help facilitate their busy lifestyles or help free up time on less enjoyable tasks

PERSONAL SPACE & TIME

Consumers seeking out products that offer moments of escapism and comfort, and encourage them to step back from the pressures of everyday life

HEALTHY LIVING

Consumers are becoming increasingly skeptical of product claims and conscious about the traceability of products and want manufacturers to address these issues want manufacturers to address these issues

VALUE WORTHINESS

Consumers becoming more discerning and showing a willingness to trade-up or trade-down if they feel an alternative product offers better value for money

EXPERIENCE SEEKING

Consumers seeking out products that are novel and unusual, even when buying everyday groceries such as exotic flavours

• r unique packaging

TRUST & AUTHENTICITY

Focus on full disclosures, ingredients and process information. Brands coerced to build relatable & authentic RTBs.

Factors resulting in shift of demand to dry fruits

• Increasing awareness of health needs
• Increasing disposable income levels
• Nuts and dried fruits carry an overall healthy image
• Nuts and dried fruits also carry rich emotional

associations, making them one of the most popular choices for gifting in India

0.22 0.24 0.26 0.28 0.30

Indian Cashew Consumption (Kernel Basis) (Million MT)

• India leads the cashew consumption charts in the World
• Recorded a growth of over 75% cashew consumption over a period of last 7-8 years

0.16 0.18 0.20 0.22 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Wide Usage of Cashew

. . . On the production front !!!

0.65 0.70 0.75 0.80 0.85 0.17 0.18 0.19 0.20

Cashew Production (Kernel Basis)- In Million MT

• 18% increase in India in cashew production over a period of last 10 years
• However, World cashew production increased by 47% over a period of last 10 years

0.45 0.50 0.55 0.60 0.14 0.15 0.16

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Indian Production World Production

Production related challenges

Poor farm mechanisation Low cashew productivity Higher dependency on imports Stringent factories and labour laws Stringent factories and labour laws

0.40 0.50 0.60 0.70 0.80 0.90 1.00

Indian RCN Imports (in Million MT)

Other Internal Challenges. . .

External Challenges. . .

Competition from key producing countries Reduced raw nut supplies & raw nut suppliers turning out to be competitors Geo-political concerns Low cost of raw material and processing cost in the raw nut producing countries Subsidized production inputs and external funding in competing countries Counterparty Risk Product Substitution

Likely shift towards. . . Product substitution !

Prospects- 2019

Good cashew crop foreseen in India for 2019 Higher carry over stocks to put pressure on cashew markets Indian markets are expected to grow at 4-5% on consumption Exports might continue to decline to cater to increasing Indian demand Shift from Import-Process-Export to Import-Process-Consume Stiff competition from other nuts like almonds, peanuts